This is the fourth article in our 18 piece series on the Apprenticeship Levy. So far, we’ve explored what the Apprenticeship Levy is, who’s eligible for contributions and who has access to the funds. In this piece, we’re going to be expanding on the last point and asking how Apprenticeship Levy funds can be spent. Can they be used to pay wages or cover travel costs? Can they be used to set up an apprenticeship programme or fund apprentices from existing programmes? These are all common questions, so let’s break things down.
What exactly are you allowed to spend levy funds on?
Any employer with an annual wage bill higher than £3 million will automatically need to pay into the levy. Smaller business will have access to funds too, but will usually need to front 10% of the cost of any apprentice training. Naturally, any business that contributes to the levy programme will want to recoup their investment and benefit from it, but there is strict guidance on how levy funds can be used. The first thing to note, is that the Apprenticeship Levy fund cannot be spent on anything that isn’t apprentice-based. Nor can it be used to cover wages, travel costs, work placements or setting up your own internal apprenticeship system. This is partly to prevent misuse of funds, but also to ensure that all apprenticeship courses associated with the levy fund adhere to consistent standards and a particular level of quality. To that end, the government has set up a public register of approved training providers and programmes that businesses can use when spending their levy funds.
How are levy funds accessed?
If your business meets the £3m payroll threshold and is required to contribute to the Levy, it will gain access to an Apprenticeship Services Account (ASA). This account can then be used to purchase and manage apprenticeship courses directly from the register of government approved programmes. If your business is required to pay the 10% contribution to meet the costs of the Apprenticeship, you will pay this directly to the provider, who will in turn claim the remaining 90% of the funding from the government throughout the duration of the apprenticeship programme.
Can you spend levy funds on existing employees?
You absolutely can. There is a common misconception about apprenticeships that still lingers on, where we think of apprentices as young school-leavers taking their first steps into the world of work. Today, this couldn’t be further from the truth and the Apprenticeship Levy has been engineered with this in mind. So long as the funds are used on recognised and approved training providers from the official register, they can be spent on training up new members of staff or helping existing members of staff gain extra qualifications as long as they are an apprenticeship that may lead to promotion. Age isn’t a factor, but the government will offer a £1,000 additional incentive grant if a business brings in apprentices aged between 16-18 to help bring younger people into work.
In a nutshell, so long as a business uses the approved register of apprenticeship training programmes, the funds can be spent on whoever you wish. In our next article, we’ll be following up on this piece by taking a closer look at the ASA digital account - what it means, how it can be used and tips to make it work for your business.
About Ascento
Ascento learning and development specialise in providing workforce development apprenticeship programmes to both apprenticeship levy paying employers and non levy employers. We work closely with employers to identify the key areas for development and design strategic solutions to tackle these with programmes that are tailored to each individual learner. With two schools of excellence focusing on Management and Digital Marketing we don’t deliver every qualification under the sun, but focus on what we know best and ensure that quality is at the heart of everything we do.
